In California, an Uber Driver is an Employee

California’s Labor Commissioner recently found that Uber drivers in the state are “employees,” which entitles them to the protections of the state’s labor code, including a minimum wage. In arguing that its drivers were not “employees,” Uber claimed that it did not exercise the necessary control over the drivers to make them fall within the legal definition of an employee; rather, it argued, that it is a neutral technological service that connects independent drivers to customers.

The Labor Commissioner disagreed. For instance, Uber, not the driver, sets a non-negotiable price for the service, and it will unilaterally terminate a driver if he or she falls below 4.6 stars on Uber’s approval-rating system.

With the finding that Uber drivers are “employees” in California, Uber must indemnify (or reimburse) its drivers for necessary expenses, such as paying tolls and the cost of driving under the IRS mileage rate, and pay at least the minimum wage for hours worked with overtime where applicable. Uber is appealing the Labor Commissioner’s ruling.

The Labor Commissioner’s ruling on Uber drivers is significant as the “sharing” economy becomes more prevalent. It means that despite the demands by sharing-economy employers that its workers are not “employees,” in at least this case and pending the outcome of appeals, they are in fact “employees” and entitled to the benefits and protections of the labor laws.